II 

118TH CONGRESS 

2D SESSION S. 5198 

To amend the Internal Revenue Code of 1986 to provide for oil and natural 

gas well remediation and restoration accounts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25, 2024 

Mr. MARSHALL (for himself and Mr. LANKFORD) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for oil and natural gas well remediation and restoration 

accounts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Energy Pro5 ducers Performance Enhancement Act’’. 

6 SEC. 2. OIL AND NATURAL GAS WELL REMEDIATION AND 

7 RESTORATION ACCOUNTS. 

8 (a) IN GENERAL.—Part VI of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 is amended 

10 by adding at the end the following new section: 


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1 ‘‘SEC. 199B. OIL AND NATURAL GAS REMEDIATION AND 

2 RESTORATION ACCOUNTS. 

3 ‘‘(a) IN GENERAL.—In the case of an eligible small 

4 producer, there shall be allowed as a deduction for the tax5 able year an amount equal to the aggregate amount paid 

6 in cash during such taxable year to an oil and natural 

7 gas remediation and restoration account for which the eli8 gible small producer is the account beneficiary. 

9 ‘‘(b) LIMITATION.— 

10 ‘‘(1) IN GENERAL.—The amount allowable as a 

11 deduction under subsection (a) to any taxpayer shall 

12 not exceed $35,000. 

13 ‘‘(2) INFLATION ADJUSTMENT.— 

14 ‘‘(A) IN GENERAL.—In the case of a tax15 able year beginning after 2025, the $35,000 

16 amount in paragraph (1) shall be increased by 

17 an amount equal to— 

18 ‘‘(i) such dollar amount, multiplied by 

19 ‘‘(ii) the cost-of-living adjustment de20 termined under section 1(f)(3) for the cal21 endar year in which the taxable year be22 gins, determined by substituting ‘calendar 

23 year 2024’ for ‘calendar year 2016’ in sub24 paragraph (A)(ii) thereof. 

25 ‘‘(B) ROUNDING.—Any increase deter26 mined under subparagraph (A) which is not a 


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1 multiple of $1,000 shall be rounded to the near2 est multiple of $1,000. 

3 ‘‘(c) ELIGIBLE SMALL PRODUCER.—For purposes of 

4 this section— 

5 ‘‘(1) IN GENERAL.—The term ‘eligible small 

6 producer’ means, with respect to any taxable year, 

7 any taxpayer— 

8 ‘‘(A) which had no more than 500 full-time 

9 equivalent employees (as defined in section 

10 45R(d)) for the preceding taxable year, and 

11 ‘‘(B) which— 

12 ‘‘(i) is allowed a deduction under sec13 tion 611 with respect any oil or gas well, 

14 and 

15 ‘‘(ii) computes all such deductions in 

16 accordance with section 613 by reason of 

17 the application of subsections (b) or (c) of 

18 section 613A. 

19 ‘‘(2) AGGREGATION.—All persons treated as a 

20 single employer under subsection (a) or (b) of sec21 tion 52 or subsection (m) or (o) of section 414 shall 

22 be treated as one person for purposes of paragraph 

23 (1). 

24 ‘‘(d) OIL AND NATURAL GAS REMEDIATION AND

25 RESTORATION ACCOUNT.—For purposes of this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘oil and natural 

2 gas remediation and restoration account’ means a 

3 trust created or organized in the United States as 

4 an oil and natural gas remediation and restoration 

5 account exclusively for the purpose of paying the 

6 qualified well capping, closing, and remediation costs 

7 of the account beneficiary, but only if the written 

8 governing instrument creating the trust meets the 

9 following requirements: 

10 ‘‘(A) Except in the case of a rollover con11 tribution described in subsection (f)(5), no con12 tribution will be accepted— 

13 ‘‘(i) unless it is in cash, or 

14 ‘‘(ii) to the extent it exceeds the dollar 

15 amount in effect under subsection (b). 

16 ‘‘(B) The trustee is a bank (as defined in 

17 section 408(n)) or such other person who dem18 onstrates to the satisfaction of the Secretary 

19 that the manner in which such other person will 

20 administer the trust will be consistent with the 

21 requirements of this section. 

22 ‘‘(C) The assets of the trust will not be 

23 commingled with other property except in a 

24 common trust fund or common investment 

25 fund. 


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1 ‘‘(D) The interest of an account bene2 ficiary in the balance in the account is non3 forfeitable. 

4 ‘‘(2) QUALIFIED WELL CAPPING, CLOSING, AND

5 REMEDIATION COSTS.—The term ‘qualified well cap6 ping, closing, and remediation costs’ means amounts 

7 paid or incurred by an account beneficiary which are 

8 related to the capping, closing, and remediation of 

9 oil producing, injection, and natural gas wells, in10 cluding— 

11 ‘‘(A) costs associated with meeting Fed12 eral, state, or tribal regulatory and permitting 

13 requirements associated with capping, closing, 

14 and remediating an oil producing, injection, or 

15 natural gas well, 

16 ‘‘(B) labor costs associated with removing 

17 oil producing, injection, and natural gas well in18 frastructure, 

19 ‘‘(C) the cost of materials used to cap, 

20 close, and remediate an oil producing, injection, 

21 or natural gas well, and 

22 ‘‘(D) labor costs associated with the appli23 cation of materials and the use of equipment to 

24 prepare, cap, close, and remediate an oil pro25 ducing, injection, or natural gas well. 


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1 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 

2 ‘‘(1) IN GENERAL.—An oil and natural gas re3 mediation and restoration account is exempt from 

4 taxation under this subtitle. Notwithstanding the 

5 preceding sentence, any such account is subject to 

6 the taxes imposed by section 511 (relating to imposi7 tion of tax on unrelated business income of chari8 table, etc. organizations). 

9 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

10 to the rules of paragraphs (2) and (4) of section 

11 408(e) shall apply to oil and natural gas remediation 

12 and restoration accounts, and any amount treated as 

13 distributed under such rules shall be treated as not 

14 used to pay qualified well capping, closing, and re15 mediation costs. 

16 ‘‘(f) TREATMENT OF DISTRIBUTIONS.— 

17 ‘‘(1) AMOUNTS USED FOR QUALIFIED WELL

18 CAPPING, CLOSING, AND REMEDIATION COSTS.—Any 

19 amount paid or distributed out of an oil and natural 

20 gas remediation and restoration account which is 

21 used exclusively to pay qualified well capping, clos22 ing, and remediation costs of any account bene23 ficiary shall not be includible in gross income. 

24 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

25 QUALIFIED WELL CAPPING, CLOSING AND REMEDIVerDate Sep 11 2014 01:10 Oct 12, 2024 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S5198.IS S5198

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1 ATION COSTS.—Any amount paid or distributed out 

2 of an oil and natural gas remediation and restora3 tion account which is not used exclusively to pay the 

4 qualified well capping, closing, and remediation costs 

5 of the account beneficiary shall be included in the 

6 gross income of such beneficiary. 

7 ‘‘(3) TREATMENT OF EXCESS CONTRIBUTIONS

8 RETURNED BEFORE DUE DATE OF RETURN.—Rules 

9 similar to the rules of section 223(f)(3) shall apply 

10 for purposes of this section. 

11 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

12 USED FOR QUALIFIED WELL CAPPING, CLOSING, AND

13 REMEDIATION COSTS.—The tax imposed by this 

14 chapter on the account beneficiary for any taxable 

15 year in which there is a payment or distribution 

16 from an oil and natural gas remediation and restora17 tion account of such beneficiary which is includible 

18 in gross income under paragraph (2) shall be in19 creased by 25 percent of the amount which is so in20 cludible. 

21 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

22 described in this paragraph as a rollover contribu23 tion if it meets the requirements of subparagraphs 

24 (A) and (B). 


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1 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

2 not apply to any amount paid or distributed 

3 from an oil and natural gas remediation and 

4 restoration account to the account beneficiary 

5 to the extent the amount received is paid into 

6 an oil and natural gas remediation and restora7 tion account for the benefit of such beneficiary 

8 not later than the 60th day after the day on 

9 which the beneficiary receives the payment or 

10 distribution. 

11 ‘‘(B) LIMITATION.—This paragraph shall 

12 not apply to any amount described in subpara13 graph (A) received by an individual from an oil 

14 and natural gas remediation and restoration ac15 count if, at any time during the 1-year period 

16 ending on the day of such receipt, such indi17 vidual received any other amount described in 

18 subparagraph (A) from an oil and natural gas 

19 remediation and restoration account which was 

20 not includible in the individual’s gross income 

21 because of the application of this paragraph. 

22 ‘‘(g) NATURAL GAS.—For purposes of this section, 

23 the term ‘natural gas’ has the meaning given such term 

24 under section 613A(e)(2).’’. 

25 (b) EXCESS CONTRIBUTIONS.— 


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1 (1) IN GENERAL.—Section 4973(a) of the In2 ternal Revenue Code of 1986 is amended by striking 

3 ‘‘or’’ at the end of paragraph (5), by inserting ‘‘or’’ 

4 at the end of paragraph (6), and by inserting after 

5 paragraph (6) the following new paragraph: 

6 ‘‘(7) an oil and natural gas remediation and 

7 restoration account (within the meaning of section 

8 199B),’’. 

9 (2) EXCESS CONTRIBUTIONS.—Section 4973 of 

10 such Code is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(i) EXCESS CONTRIBUTIONS TO OIL AND NATURAL

13 GAS REMEDIATION AND RESTORATION ACCOUNTS.— 

14 ‘‘(1) IN GENERAL.—In the case of an oil and 

15 natural gas remediation and restoration account, the 

16 term ‘excess contributions’ means the amount by 

17 which the amount contributed for the taxable year to 

18 such account (other than contributions under section 

19 199B(f)(5)) exceeds the contribution limitation de20 termined under section 199B(d)(1)(A)(ii). 

21 ‘‘(2) SPECIAL RULE.—For purposes of this sub22 section, any contribution which is distributed out of 

23 the account in a distribution to which section 

24 199B(f)(3) applies shall be treated as an amount 

25 not contributed.’’. 


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1 (c) APPLICATION OF PROHIBITED TRANSACTION

2 RULES.— 

3 (1) IN GENERAL.—Section 4975(e)(1) of the 

4 Internal Revenue Code of 1986 is amended by strik5 ing ‘‘or’’ at the end of subparagraph (F), by redesig6 nating subparagraph (G) as subparagraph (H), and 

7 by inserting after subparagraph (F) the following 

8 new subparagraph: 

9 ‘‘(G) an oil and natural gas remediation 

10 and restoration account described in section 

11 199B, or’’. 

12 (2) SPECIAL RULE.—Section 4975(c) of such 

13 Code is amended by adding at the end the following 

14 new paragraph: 

15 ‘‘(8) SPECIAL RULE FOR OIL AND NATURAL GAS

16 REMEDIATION AND RESTORATION ACCOUNTS.—An 

17 individual for whose benefit an oil and natural gas 

18 remediation and restoration account (within the 

19 meaning of section 199B) is established shall be ex20 empt from the tax imposed by this section with re21 spect to any transaction concerning such account 

22 (which would otherwise be taxable under this sec23 tion) if, with respect to such transaction, the ac24 count ceases to be an oil and natural gas remediVerDate Sep 11 2014 01:10 Oct 12, 2024 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S5198.IS S5198

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1 ation and restoration account by reason of the appli2 cation of section 199B(d)(2) to such account.’’. 

3 (d) CLERICAL AMENDMENT.—The table of sections 

4 for part VI of subchapter B of chapter 1 of the Internal 

5 Revenue Code of 1986 is amended by adding at the end 

6 the following new item: 

‘‘Sec. 199B. Oil and natural gas remediation and restoration accounts.’’. 

7 (e) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

Æ 


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